High Scooter Demand Fuels Growth For Two-Wheeler Sales: ICRA Report

India is a big market for two-wheeler manufacturers in India and that be gauged by the fact that the industry grew at 14.8 per cent year-on-year, during FY2018, which is the highest since FY2011. A study by the Investment Information & Credit Rating Agency of India (ICRA) said that there were multiple factors for the growth of two-wheeler sales in India during the fiscal that just ended. ICRA says that a strong recovery in the rural market along with a solid demand for scooters helped revive the two-wheeler market in India. The strong demand in scooters also rubbed off a growth in the demand for entry-level motorcycles as well.

(The last few months have seen multiple 125 cc scooter launches)

The scooter segment in particular saw a growth of almost 20 per cent in volumes during FY2018. A major factor was the increased demand for scooters from rural and semi-urban areas. People have started to look at scooters as a preferred mode of transport thanks to improved road quality, a scooter's unisex appeal and the healthy growth in the number of working women in these areas as well. Adding to it was the continuous activity happening in the scooter market wherein the manufacturers targeted different segments. The last few months saw the launch of quite a few 125 cc scooters, most notably, the Honda Grazia, the TVS Ntorq and the Aprilia SR 125, which again revived the interest in scooters from the urban market, where people are looking to buy stylish, powerful and feature rich scooters.

(Premium motorcycles too have an increased share, of 7 per, cent in overall sales in FY2018)

Talking about motorcycles, this sub-segment's volumes grew by 13.7 per cent in FY2018, which was double-digit growth after five years. The main driver of the growth was the 75-110 cc segment which was due to a increased demand from the rural areas on the back of a normal monsoon. The 150-200 cc segment saw an increased demand with buyers transitionting from the 125-150 cc segment. In fact, the higher displacement premium motorcycles too showed growth in sales volumes and accounted for 7 per cent of the total motorcycle sales in FY2018. The same figure in FY2014 was merely 2 per cent. ICRA expects this trend to continue for FY2019 as well.

"Going forward, ICRA expects domestic two-wheeler volumes to grow at 8-10% during FY2019, on an expanded base of FY2018. In terms of segment wise growth trend, we expect scooters to continue to outpace the overall two wheeler volume growth in domestic market in FY2019. Motorcycles are expected to register high single digit growth in FY2019 with a broad based volume recovery across various sub segments with Premium segment continuing to find favor. Additionally, the recovery in oil prices has resulted in higher demand from select international markets, which coupled with new markets explored by OEMs would drive export growth in the current fiscal," said Anupama Arora, VP, sector-head and corporate ratings, ICRA.